Parastatal performance poser two years on

IN this column, we use the lens of strategic Human Resources (HR) to x-ray business and organisational issues.

The Human Capital Telescope with Brett Chulu

Strategic HR proffers unique insights into business challenges by translating external trends and expectations into talent, leadership and organisational culture interventions.

To a very large extent, the challenges besetting our state enterprises and parastatals (SEPs) are rooted in talent, leadership and organisational culture deficits.

In July 2010, with minister Gorden Moyo barely a month   into his new SEP ministerial assignment, I wrote an article titled  Parastatals performance poser for Moyo.

The opening lines of that article summed up the kernel of the issues that were of concern:  “He (minister Moyo) is expected to hit the ground running. Unfortunately, that ground is planted with booby traps. The task to change the fortunes of the perennially under-performing state -owned enterprises (SoEs) is no Disneyland stuff, given the deep-seated and bone-deep nature of institutionalised profligacy and misgovernance.”

In that article we asked: “Is Moyo being asked to flog a dead horse?” Two questions this time.

Engine without fuel?
A key issue we highlighted then was that the SEP minister was confronted with the challenge of perceived turf encroachment into line ministries governing SEPs.  We further observed the SEP ministry would practically create two centres of power.

The poser was, and still is, that line ministries derive their power from acts of parliament while the SEP ministry, in the absence of an enabling act of parliament would have to lean on other forms of power.

We also made the observation that most acts of parliament governing SEPs have a clause to effect that the line ministers are required in some instances to act in “any direction the President may give him (the minister).”

When the SEP portfolio was mooted at the birth of the national unity government, the existing power matrix was not reconfigured.

Without measured effort on the part of the architects of the government of national unity to re-architect the power ecosystem to induct the new SEP ministry into a revised power equation, the old power ecosystem was bound to hold sway.

Resultantly, by default, the line ministries in many critical aspects wield more power than the SEP ministry. For instance, current laws mandate and empower the SEP line minister to appoint and disappoint board members and set their remuneration as well. The SEP ministry can’t do this at the moment. If the truth be told, without formal levers of power, the SEP ministry is reduced to a mere advisory body without executive capacity.

Without meaningful levers of power, the new ministry was handed the daunting task of initiating deep-seated reforms.

With this handicap, pragmatism necessitated a twin strategy of doing organisational development work while seeking to influence the reconstitution of the power ecosystem.

In the piece we penned two and half years ago on this very issue, we suggested the SEP ministry would have to push for a law that gave it statutory authority to enforce its programmes.

We wrote then: “In my opinion, Moyo should push for a bill enabling the formation of a central SoE (state-owned enterprises) authority and the adoption of a SoE governance code crafted along the lines of the OECD guidelines, niftily deferring final arbitration to Parliament. Taking the route of amending specific acts governing each parastatal will more than likely give rise to legislative and procedural logjams.

Moyo could also nimbly enter into an alliance with his finance counterpart to push for parastatals to submit comprehensive salary schedules as part of statutory submissions.”

It would appear our suggestions were in resonance with the thinking of the SEP ministry, as they proceeded to craft a corporate governance code, and a Management Bill that, among other things, seeks to give the ministry’s policy proposals statutory force.

The SEP ministry is reported to have partnered with the finance ministry in which the latter will be asked to disburse financial resources to SEPs in line with adherence to policy and governance performance. In my opinion, this comply-or-starve approach has more disadvantages than advantages.

Taming lions?
Our thinking at the time was premised on the observation that a corporate governance code the SEP ministry would possibly craft would be next to impossible to enforce, especially on aspects not contained in the individual acts of parliament governing each SEP.
Surprisingly, on the positive side, what has emerged, with regards to enforcement of corporate governance standards, is a   group of SEPs that go beyond standard requirements.

The National Social Security Authority (Nssa) and the National Aids Council (Nac) immediately spring to mind.  These two entities recently published audited financial statements and corporate reports in the public media, supported by both financial and nonfinancial disclosures.

These entities were neither bound by the Corporate Governance Framework for SEPs nor by any statutory instrument to do so. What is also interesting is the respective chairpersons and chief executives appended their signatures to the financial statements published in the media, a requirement associated with listed companies.

In fact, Nac and Nssa are doing what most listed companies are failing to do as pointed out by Wesley Sibanda, the chairperson of the Public Accountants and Auditors Board (Paab).   In an interview with Elias Mutowo, the permanent secretary of the SEP ministry, which was published in this column, he insisted it was not in the plans of his ministry to make it mandatory for SEPs to publish financial statements in the media.

Nac and Nssa represent an anomaly, albeit, a good one. The SEP ministry might want to carefully research into factors that led these SEPs to go beyond standard requirements, in the hope of populating these factors among other SEPs. In change management, we leverage upon what is called the 20-60-20 rule.

This rule states that there is roughly 20% of individuals/entities who will readily embrace change; another 20% who will fiercely resist it and an undecided 60% who can potentially be influenced over to the side of change.

If the 20-60-20 rule holds water, then the SEP ministry can, through the use of social influence and leadership competencies, manage to woo at least 50% of SEPs to implement its policy and corporate governance reforms without resorting to formal political power. This implies that even when the Management Bill is signed into law, the basis for adherence to policy and governance stipulations should be largely based on social influence.

Without formal and informal power it is next to impossible to influence the SEP talent, leadership and cultural transformation agenda.

However, the SEP ministry has sowed seeds of reform that will bear full fruit in years to come.

We are introducing a ‘Reflect on it’ section to help our readers assimilate ideas and principles discussed.

Reflect on  it
One powerful insight from strategic HR is: People do not resist change, they resist personal losses. How can you apply this insight to your organisation to minimise resistance to change and reform?

Chulu is a strategic HR consultant who has worked with both listed and unlisted companies. —

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